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01/10 23:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several concerns: a decline in quarterly net income due to lower revenue, reluctance to provide guidance amid market uncertainties, and delays in project greenlighting. Despite some positive aspects, like improved full-year net income and strategic plans for IP development, the lack of guidance and revenue decline overshadow these. The Q&A section further underscores uncertainties, especially with tariffs and market disruptions, leading to a negative sentiment overall. The absence of market cap data limits the impact assessment, but the overall sentiment is negative.
Fourth Quarter Revenue $47.4 million compared to $51.8 million for the same period last year, showing a decline. The decline was primarily influenced by fewer animation production service engagements during the quarter.
Full Year Revenue $185.7 million, a 12% increase over 2024. Growth was driven by production services, with 19% year-on-year growth in this area, despite delays in certain productions into fiscal 2026.
License and Distribution Revenue $27.4 million, a 15% year-on-year decline. The largest contributor to this decline was the nonrenewal of the scripted show 'Reginald the Vampire' at the start of the fiscal year.
Gross Margin 21%, slightly lower than the 23% recorded during the prior fiscal year. This reflects a growing share of production services revenue, which typically carry lower margins.
Net Income (Fourth Quarter) $1.8 million compared to $2.5 million in the same period last year. The decline was due to lower revenue rather than increasing costs year-on-year.
Net Income (Full Year) $6.3 million compared to $2.4 million in the prior year, showing significant improvement. This was driven by careful cost management and cost reduction measures implemented in the previous fiscal year.
Adjusted EBITDA (Fourth Quarter) $4.2 million compared to $7 million in the prior year, reflecting lower revenue.
Adjusted EBITDA (Full Year) $18.3 million, 10% higher than fiscal 2024, in line with expectations.
Acquisition of BeddyByes: Thunderbird acquired BeddyByes, including a collaboration with Disney and Bulldog Licensing for merchandising in the U.K. and Ireland.
Development of Surf's Up series: Atomic is developing a new animated adventure for kids 6 to 9, based on Sony Pictures' hit film.
Young adult scripted productions: Netflix greenlit Crew Girl, a new coming-of-age drama series. Other productions include How To Lose A Popularity Contest and Eerie Academy.
Mermicorno: Starfall: Debuted on MAX and ranked #11 in the kids and family category. Expanded globally and launched a Roblox game.
Global entertainment and media growth: Projected to grow from USD 2.9 trillion in 2024 to USD 3.5 trillion by 2029. Emerging markets like India, Indonesia, and Saudi Arabia expected to grow above 7.5% CAGR.
Demand for kids' content: Global demand for preschool titles grew by 25% in the last 12 months, with school-age kids' content close behind at 21%.
Adaptable content: Mermicorno: Starfall expanded globally, showcasing the power of adaptable content across languages and platforms.
Revenue growth: Full-year revenue increased by 12% to USD 185.7 million, driven by production services.
Cost management: Net income improved to USD 6.3 million due to disciplined cost management.
Production activity: Worked on 38 productions with 25 programs in various stages of production at the end of Q4.
AI integration: AI is being used to enhance efficiency but not replace human creativity.
M&A activity: Positioned to seize opportunities in media, advertising, and tech consolidation.
Share buyback and financial flexibility: Spent USD 1.5 million on share buybacks and secured a revolving credit facility for operational scaling.
Market Disruption: The entertainment industry is experiencing significant disruption, which creates challenges in adapting to new market dynamics and consumer behaviors.
Greenlight Delays: The timing for greenlighting new projects is becoming increasingly unpredictable, leading to delays in production schedules and revenue recognition.
Revenue Decline in Animation Services: There was a year-on-year decline in animation production services revenue, attributed to fewer engagements during the quarter.
License and Distribution Revenue Decline: License and distribution revenue decreased by 15% year-on-year, primarily due to the nonrenewal of a scripted show and timing of IP project deliveries.
Lower Gross Margins: Gross margins declined slightly due to a growing share of lower-margin production services, particularly in scripted and unscripted projects.
Economic Uncertainty in Emerging Markets: While emerging markets like India and Saudi Arabia show growth potential, economic uncertainties could impact the scalability and profitability of localized content.
Dependence on Service Productions: A significant portion of revenue comes from service productions, which typically carry lower margins and may limit profitability growth.
Cost Management Challenges: The company is actively managing costs due to market changes and delays in project timelines, which could strain operational efficiency.
Regulatory and Competitive Pressures: The company faces competitive pressures and potential regulatory hurdles in expanding its global footprint and securing new partnerships.
Revenue Growth: PricewaterhouseCoopers projects global entertainment and media revenues to grow from approximately USD 2.9 trillion in 2024 to roughly USD 3.5 trillion by 2029. Thunderbird anticipates benefiting from this growth, particularly in emerging markets like India, Indonesia, and Saudi Arabia, which are expected to grow at compound annual growth rates above 7.5%.
Market Trends: Demand for kids' content is rising sharply worldwide, with global demand for preschool titles growing by 25% and content for school-age kids by 21% in the last 12 months. Thunderbird plans to focus on creating high-quality, scalable children's programming that appeals across languages, cultures, and platforms.
AI Integration: Thunderbird plans to leverage AI to enhance efficiency and competitiveness while maintaining human creativity and emotional insight as central to its content creation process.
Content Development: Thunderbird is prioritizing the development of intellectual property (IP) that can be leveraged for merchandise, video games, mobile, and other cross-media channels to maximize reach and revenue.
Operational Flexibility: The company has secured a revolving credit facility to scale operations and invest in new opportunities, reinforcing its business model and focus on long-term value creation.
Production Timelines: Greenlight timing for new projects is becoming harder to predict due to shifting buyer strategies and industry consolidation. Thunderbird is adapting to these changes by focusing on disciplined execution and cost management.
Strategic Growth: Thunderbird is positioned to seize new opportunities for strategic growth, including potential mergers and acquisitions, to ensure shareholder value.
Share Buyback Program: The share buyback remains very much in place, and alongside our Board, we continually evaluate the best use of cash for the company, always keeping the best interest of all audiences at the forefront. The company spent $1 million in the fourth quarter on the normal course issuer bid, also referred to as the NCIB, and a further $0.5 million subsequent to the fiscal year-end.
The earnings call reveals strong financial performance with raised revenue guidance and significant shareholder returns. The Q&A section addresses concerns about seasonality and government shutdown impacts, but emphasizes strong commitments and consumption. The company's focus on AI capabilities and market expansion is promising, despite some renewal delays. The positive sentiment is reinforced by a robust shareholder return plan and optimistic guidance, suggesting a positive stock price movement over the next two weeks.
The earnings call highlights several concerns: a decline in quarterly net income due to lower revenue, reluctance to provide guidance amid market uncertainties, and delays in project greenlighting. Despite some positive aspects, like improved full-year net income and strategic plans for IP development, the lack of guidance and revenue decline overshadow these. The Q&A section further underscores uncertainties, especially with tariffs and market disruptions, leading to a negative sentiment overall. The absence of market cap data limits the impact assessment, but the overall sentiment is negative.
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